IEX: Is IDEX Stock a Buy at $200?

Applied solutions company IDEX Corporation (IEX) has gained 150.6% over the past five years and 34.5% over the past three years. It operates through its three segments — Fluid & Metering Technologies (FMT), Health & Science Technologies (HST), and Fire & Safety/Diversified Products (FSDP). The stock has rallied 71.8% over the past year to close yesterday’s trading session at $198.74.

IEX hit its all-time high of $211.71 on January 12. Also, the company paid its 105^th consecutive regular quarterly cash dividend of $0.50 per common share on January 29. Furthermore, IEX began to see improvements in its end markets in the third quarter of 2020, which continued through the fourth quarter.

With improving market conditions, we believe the company still has plenty of upside.

Here’s what we think could shape IEX’s performance in the near term:

Acquisition of Abel Pumps

On March 11, IEX closed its acquisition of Abel Pumps, L.P. and certain of its affiliates (ABEL) from Hillenbrand, Inc. (HI). ABEL is expected to be an excellent complement to the company’s existing pump platform within the Fluid & Metering Technologies (FMT) segment. ABEL designs and manufactures highly engineered reciprocating positive displacement pumps for a variety of end markets, including mining, marine, power, water, wastewater and other general industries.

Impressive Recent Financials

For the fourth quarter ended December 31, IEX’s net sales increased 1.5% year-over-year to $614.82 million. Its $678.60 million in orders for the quarter represent a 10% increase on a year-over-year basis. Also, the company’s net income came in at $101.07 million for the fourth quarter, up 4.4% year-over-year. Its adjusted EPS increased 3% year-over-year to $1.37. IEX has also surpassed consensus EPS estimates in each of the trailing four quarters.

2024 STOCK MARKET OUTLOOK

Favorable Analyst Estimates

Analysts expect IEX’s revenue to increase 23% for the quarter ending June 30, 2021 and 9.7% in fiscal 2021. Its EPS is expected to grow 32.7% for the quarter ending June 30, 2021, 13.3% in fiscal 2021 and at a rate of 11.5% per annum over the next five years.

Wall Street analysts expect the stock to hit $210.77 in the near term, which indicates a potential upside of 5.5%. Also, of 13 Wall Street analysts that have rated that stock, three rated it a Strong Buy and six rated it a Buy.

POWR Ratings Reflect IEX’s Favorable Outlook

IEX has an overall rating of B, which equates to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. IEX has a B grade for Sentiment also, which is in sync with its average broker rating of 1.62, favorable analyst sentiment.

The stock also has a B grade for Quality. This is consistent with its trailing-12-month’s gross profit margin of 43.9%, which is higher than the industry average 28.5%.

In addition to the POWR Ratings grades I’ve just highlighted, we have also graded IEX for Momentum, Stability, Growth and Value. Get all IEX’s ratings here.

Of 88 stocks in the A-rated Industrial – Machinery industry, IEX is ranked #34.

Click here to access several other top-rated stocks in the same industry.

Bottom Line

Providing highly engineered solutions, IEX has become an established company with operating facilities in five continents. Given its solid financials, coupled with favorable analyst estimates, we think it wise to buy the stock at the current price level.

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IEX shares were trading at $196.81 per share on Wednesday afternoon, down $1.93 (-0.97%). Year-to-date, IEX has declined -0.96%, versus a 5.92% rise in the benchmark S&P 500 index during the same period.

About the Author: Manisha Chatterjee

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...